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What
is the exact implication of deduction under section 80C?
80C is reduced from Gross Total Income. The
investment should be made out of the taxable income and
invested in specific schemes eligible for deduction U/S 80C. |
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Who is eligible for deduction U/S 80C?
Deduction U/S 80C is applicable only for
the following categories. 1. An individual or 2. Hindu
Undivided Family. |
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Can
deduction U/S 80C be claimed on accrued interest of investment in
National Savings Certificate?
Deduction can be claimed on interest accrued on National
Savings Certificate.The interest is taxable. |
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Suggest a few investments and the deduction U/S 80C available
therein?
The following are some investments on which Deduction under section 80C is
available ;-
Provident Fund - This
is a long term benefit scheme. A stipulated sum is deducted
on a monthly basis from the salary of the employee.The
employee's contribution qualifies for this deduction.
The employer's contribution is also free to the extent
of 12% of the Salary.
Public Provident Fund
- A PPF account is opened with State Bank of India or
any notified nationalised Bank. Any member of the public
whether a salaried employee or a self-employed person
can participate by opening the account. The sum is repayable
after 15 years. Maximum amount that can be deposited is
Rs.70, 000 and the minimum amount to be deposited is Rs.
500 per year. You can contribute once in a month. Interest
is credited every year and is payable only on maturity.
Interest is totally tax free.
The unique advantages of this
investment is featured under
| 1. |
The
Interest at 8% is totally exempt from tax. |
| 2. |
PPF
is totally exempted from wealth tax. |
| 3. |
Nomination
is allowed. |
| 4. |
PPF
accounts can be opened in the names of minor children.
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| 5. |
One
more added feature is that parents can deposit in
these PPF accounts and can claim income tax benefits.
This is a means to create a investment
for their children and thereby transferring assets
in their children's name by the time they become
majors. |
| 6. |
One
more added feature is that parents can deposit in
these PPF accounts and can claim income tax benefits.
This is a means to create a investment
for their children and thereby transferring assets
in their children's name by the time they become
majors. |
| 7. |
There
are provisions for loans and premature withdrawals.
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National Saving Certificate -
Investments in NSC are also eligible for deduction under
the section 80C.
Interest Accrued on NSC -
The Interest Accrued on NSC is also eligible for deduction U/S 80C.
Repayment of Housing Loan
| 1. |
A
repayment of the Principal part of the housing loan
upto Rs.1,00, 000 is eligible for Deduction under section 80C in one financial
year.
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Life
Insurance Premium paid
| 1. |
Deduction under section 80C
is available on the Life insurance premia paid by
an individual, on his/her or on life of his/her
spouse or, on life of any child (including adult
children and a married daughter). |
| 2. |
Deduction under section 80C
is also available by a Hindu Undivided Family, for
the life of any member of the family to an extent
of the paid premium. |
In case the insurance
policy is discontinued before 2 years an amount equal
to total tax deduction allowed in respect of the contribution
in the past years is considered as tax payable.
Unit - Linked Insurance Plan, 1971 of the Unit Trust
of India( ULIP) - Contribution made, in the name of
any person mentioned below, for participation in the Unit-linked
Insurance plan of UTI: -
| 1. |
In
the case of an individual, the individual , the
wife or husband and any child of such individual;and |
| 2. |
In
the case of a Hindu undivided family, any member
thereof. |
Home
Loan Account Scheme / Pension fund set up by the National
Housing Bank -
The subscription or contribution to notified deposit
scheme of the National Housing Bank is also eligible
for claiming Deduction under section 80C.
Superannuation
Fund
Contribution made by an employee to an approved superannuation
fund is also eligible for rebate.
Notified
Deposit Scheme-
All subscriptions to a notified deposit scheme, for
the following is eligible for Deduction under section 80C.
| 1. |
A
public sector company which is engaged in providing
long-term finance for construction / purchase of
residential houses in India, or |
| 2. |
Any
authority constituted in India for the purpose of
dealing with and satisfying the need for housing
accommodation or for the purpose of planning, development
or improvement of cities, towns and villages, or
for both |
Notified
Pension Fund
Contribution by an individual to notified pension fund
set up by any Mutual Fund approved under section 10(23D)
or by the Unit Trust of India is eligible for rebate.
Deferred
Annuity
Any amount deducted from the salary by or on behalf
of the Government to any individual being a sum deducted
in accordance with the conditions of his service for
the purpose of securing to him a deferred annuity or
making a provision for his wife or children in so far
as the sum so deducted does not exceed one fifth of
the salary. Annuity plan of any other insurer approved
by the Insurance Regulatory and Development Authority
shall also be eligible for rebate.
Post
Office Saving Bank (Cumulative Term Deposit C.T.D)
The deposits are made for 10 - 15 years.
The amount can be deposited in an account standing in
the name of
| 1. |
In
the case of an individual, such individual, or a
minor of whom he is the guardian; and |
| 2. |
In
the case of a Hindu undivided family, any member
thereof |
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What
if I invest more than Rs. 70,000/- in other investments
(other than infra structure Bonds)?
You can claim deduction U/S 80C upto Rs.70000 only
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What
is the amount of deduction available for investments in Infrastructure
Bonds ?
Deduction under section 80C
is available if one invests in infrastructure bonds
Deduction can be availed on the amount
invested along with Other investments like PF, PPF
and other investments mentioned above. One can invest upto Rs.1,00,000/-
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Can
I invest more than Rs. 30,000 in Infrastructure bonds?
If you have invested more than Rs. 30,000 in infrastructure
bonds you can claim deduction for the amount invested upto Rs.1,00,000/- |
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How
are deduction applicable to a senior citizen?
For senior citizen there is no tax upto Rs.1,85,000/-
In case of a senior citizen i.e. an individual above 65
years the treatment for claiming rebate is in the below
order.First the rebate available under section 88 B is
considered.
Secondly, the investments qualifying for rebate under
section 88 and section 88 A is taken.
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